Gold Sells Off, Hits 9-Week Low, on Stronger U.S. Jobs Report
New York (Mar 6) Gold prices are moderately lower and scored a nine-week low in early U.S. trading Friday, in the wake of a stronger-than-expected U.S. jobs report that was just issued. Also, a rallying U.S. dollar index that hit another 11.5-year high Friday remains a bearish “outside market” force working against gold and silver. April Comex gold was last down $10.40 at $1,185.70 an ounce. May Comex silver was last down $0.213 at $15.92 an ounce.
Friday morning’s U.S. jobs report for February, which is arguably the most important U.S. economic report of the month, showed non-farm payroll employment up a higher-than-expected 295,000. The non-farm jobs number was expected to be up around 240,000 in February. This report likely gives the Federal Reserve more confidence in raising U.S. interest rates sooner rather than later.
In overnight news, many European Union countries’ bond yields dropped to record lows Friday following the European Central Bank’s release Thursday of more details regarding its 1 trillion-Euro quantitative easing measures. Italy, Spain and Portugal all saw their bond yields set new lows. EU investors reckon that nearly all the Euros set to be printed by the ECB will need to be parked in EU bonds. It’s ironic and unsettling that some of the very EU countries that have been in financial trouble in recent years are seeing their bond yields drop. It’s my bias this situation will be longer-term problematic and will also be an underlying bullish factor for safe-haven U.S. Treasuries and gold.
The Euro zone’s fourth-quarter gross domestic product growth was unrevised at up 0.3% from the third quarter, it was reported Friday. Fourth-quarter GDP was up 0.9%, year-on-year.
The strong U.S. dollar continues to be a feature in the market place this week as the dollar index hit an 11.5-year high overnight. Meantime, the Euro currency has hit an 11-year low Friday, pressured in part by the ECB QE details released Thursday.
Other U.S. economic data due for release Friday includes the U.S. international trade report and consumer installment credit data.
The London A.M. gold fixing is $1,196.50 versus the previous P.M. fixing of $1,202.00.
Technically, April gold futures bears have the firm overall near-term technical advantage as a six-week-old downtrend line is in place on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,223.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the late-January low of $1,168.30. First resistance is seen at $1,1905.00 and then at the overnight high of $1,200.00. First support is seen at Friday’s low of $1,182.00 and then at $1,175.00. Wyckoff’s Market Rating: 2.5
Source: KitcoNews
